Archives: August, 2008

The Democrats and Free Trade

If and when trade and globalization come up at the Democratic National Convention next week, I can almost guarantee that the take will be negative. It has become part of the party’s core message these days that free trade favors the rich at home and our unfair trading partners abroad. Just yesterday, in a tour of southern Virginia, Democratic hope Barak Obama took an indirect swipe at trade when he told a crowd in Martinsville, “You’re worried about the future. Here people have gone through very tough times. When you’ve got entire industries that have shipped overseas, when you’ve got thousands of jobs being lost… . That’s tough.”

Not all Democrats share the pessimistic view of trade. In the latest edition of the Cato Journal, hot off the presses, I review a new book by pro-trade Democrat Ed Gresser of the Progressive Policy Institute. In my review of Freedom from Want: American Liberalism and the Global Economy, I wrote:

Although it is easy to forget today as Democratic candidates rail against NAFTA and globalization, but for decades it was the Democratic Party that championed lower tariffs. Democrats opposed the high tariff wall maintained by Republicans from the Civil War to World War One, arguing that tariffs benefited big business at the expense of poor consumers. Under President Woodrow Wilson, Congress drastically lowered tariffs in 1913 and replaced the revenue with an income tax, only to see Republicans raise tariffs again in the 1920s, culminating in the Smoot-Hawley Tariff of 1930 and the Great Depression that followed.

The Democrats should think long and hard before they give up that legacy altogether.

You can read the full review here.

The Role of NATO Expansion

My buddy Matt Yglesias takes up Thomas Friedman’s NYT column yesterday pointing out the role that NATO expansion played in creating the climate of tense relations between Washington and Moscow.  Matt concludes “you can’t draw a straight line from the initial NATO enlargement decision to war in the summer of 2008.”

Well, fine.  It’s true, you can’t draw a straight line.  But it certainly played a big role.  Moreover, Matt’s contention that the positive side of the NATO expansion ledger (“helping to consolidate democratic norms [especially in the field of civil-military relations] in a swathe of countries that’s now pretty big and prosperous and somewhat important”) balances out the negative (setting the stage for the situation in which we find ourselves today vis-a-vis Russia) just doesn’t hold up.

First, the perception that NATO is an engine of democratic enlargement has some fairly significant problems with it, as Dan Reiter pointed out in International Security in 2001 (.pdf).  (Follow up debate in IS here.)

Moreover, while the Clinton administration was making this quasi-Wilsonian argument about spreading democracy out of one side of their mouths, out of the other side they were blustering as Strobe Talbott did in 1997 that “there is no more solemn commitment the United States can make,” pointing out the implications of Article V–the part of the NATO charter that says an attack on one member shall be viewed as an attack on all.  Talbott conceded further that the American nuclear arsenal would be used to back up those obligations, and that such commitments were “serious stuff.”  In the New York Review of Books, Talbott had taken to making outright machtpolitik-y statements like his idea that the first argument that should be presented to Russia about NATO expansion was

Enlargement is going to happen; fighting it with threats will only intensify the darkest suspicions about Russia’s intentions and future.

So we’re going to do it anyway, we don’t care what you say, and you’re weak and can’t do anything about it, so you’d best shut up.  Clear enough.  Rest assured the Russians heard declarations like these in addition to the Wilsonian claptrap that the Clinton people rolled out to concerned domestic audiences.  That, in part, is why Putin today says things like he did to NATO in Bucharest, that

Russia viewed “the appearance of a powerful military bloc” on its borders “as a direct threat” to its security. “The claim that this process is not directed against Russia will not suffice,” Mr. Putin said. “National security is not based on promises.”

Either NATO is a binding military alliance against Russia, or it’s not.  It could be other things at the same time, but we shouldn’t be confused about what it was that made NATO membership so attractive to a country like, say, Poland.  It was Article V.

It ought to go without saying that Putin is far from blameless in all this, and the emerging narrative–that he laid a trap for Saakashvili–seems to me to be right.  But it ought not to be denied that the ill-advised bipartisan consensus on expanding NATO as much and as rapidly as possible helped set the backdrop for the ambiguous, fumbling, and dangerous American involvement in this conflict.

Also, even accepting the argument about promoting democratic norms as ironclad, is the status of civil-military relations in Hungary or Lithuania really worth this?  NATO expansion and the outside-the-Security Council recognition of Kosovo have been sacred cows for liberals for a long time, but it’s well past time for them to admit that they share some of the blame for the disastrous state of U.S.-Russia relations today.

Tantamount to Corruption

I’ve blogged previously about how Medicare avoids administrative costs by permitting waste and fraud.  Now it appears that Medicare avoids public scrutiny about fraud by covering it up.  Today’s New York Times reports:

Medicare’s top officials said in 2006 that they had reduced the number of fraudulent and improper claims paid by the agency, keeping billions of dollars out of the hands of people trying to game the system.

But according to a confidential draft of a federal inspector general’s report, those claims of success, which earned Medicare wide praise from lawmakers, were misleading.

In calculating the agency’s rate of improper payments, Medicare officials told outside auditors to ignore government policies that would have accurately measured fraud, according to the report. For example, auditors were told not to compare invoices from salespeople against doctors’ records, as required by law, to make sure that medical equipment went to actual patients.

As a result, Medicare did not detect that more than one-third of spending for wheelchairs, oxygen supplies and other medical equipment in its 2006 fiscal year was improper, according to the report. Based on data in other Medicare reports, that would be about $2.8 billion in improper spending.

That same year, Medicare officials told Congress that they had succeeded in driving down the cost of fraud in medical equipment to $700 million.

Some lawmakers and Congressional staff members say the irregularities that the inspector general found were tantamount to corruption and raise broader questions about the credibility of other Medicare figures.

The article discussed the extent of Medicare fraud:

Equipment sellers have submitted counterfeit documents, forged doctors’ signatures and filed claims on behalf of patients who were dead or had never been seen by the prescribing physician, according to many reports by government oversight agencies.

For example, a Florida businessman was sentenced last year to 37 months in prison for submitting more than $5.5 million of fake claims to Medicare. The businessman operated for months, despite giving the agency an address that was actually a utility closet…

Medicare reported to Congress that, for the fiscal year of 2006, AdvanceMed’s investigations had found that only 7.5 percent of claims paid by Medicare were not supported by appropriate documentation. But the inspector general’s review indicated that the actual error rate was closer to 31.5 percent.

For instance, according to the report, the Office of Inspector General examined a claim for an electric wheelchair that AdvanceMed had said was appropriate. The inspector general’s investigation revealed that the physician who was listed as having prescribed the wheelchair had no knowledge of the prescription.

The person who received the wheelchair said that he had never met with the physician, that he did not need a wheelchair and that he had never used it, according to the report. His wife had also received a wheelchair that she had not asked for and never used.

Equipment sellers can pocket more than $2,500 every time they send a powered wheelchair to a patient and bill Medicare.

Don’t worry, though, because your congresscritters are on the job:

On July 1, Medicare instituted a new competitive bidding system that officials said would reduce both fraud and costs for medical equipment.

On July 15, however, Congress suspended the program, after equipment manufacturers and sellers began an aggressive lobbying campaign.

A leading congressional watchdog was outraged:

“This is outrageous,” said Senator Charles E. Grassley of Iowa, the top-ranking Republican on the Senate Finance Committee, who has repeatedly credited the Centers for Medicare and Medicaid Services with reducing improper expenditures. “If heads don’t roll, you can’t change the culture of this organization,” he added.

To clarify, Grassley was of course referring to the culture of Medicare, not Congress.

Another congressional watchdog had seen it all before:

“This report doesn’t surprise me,” said Representative Pete Stark, Democrat of California and a senior member of the Ways and Means Committee. He has pushed to cut improper Medicare spending. “To look better to the public, you cook the books,” he said. “This agency is incompetent.”

Of course, Pete Stark’s solution for Medicare’s incompetence is to force you to enroll:

There is a road map laid out for us…Medicare. Medicare has lower administrative costs than any private plan on the market…Medicare has shown us the power of simplicity; we need only expand its promise to the rest of our population.

Medifraud for all!

Dear Leo

Leo Casey, an award-winning teacher and a rep for the United Federation of Teachers, wrote a blog post today lamenting what he sees as cherry picking of studies by school choice advocates. Entirely apart from the validity of that claim, it bespeaks a desire on Mr. Casey’s part to look at the broadest possible array of relevant evidence. Good for him. I agree so strongly with his sentiment that I spent the last several months putting together the most comprehensive worldwide review of the evidence on public vs. private school outcomes to date, to be released in a few weeks (“Markets vs. Monopolies in Education: A Global Review of the Evidence”). It collects and tabulates 115 statistical findings drawn from 55 separate studies conducted in over 20 nations.

Most of these findings favor private provision of education over government provision. But, of course, private schools differ quite a bit in levels of regulation and sources of funding from one nation to another. To address that complication, I included a tabulation that specifically compares the most market-like private school systems (minimal regulation and at least some parent funding) with typical monopoly government school systems. The results of this more meaningful breakdown of the evidence differ noticeably from the vague public vs. private comparison. I’ll wait to mention just how they differ until the study’s official release in early September.

When the study is released, I hope that Mr. Casey will have a look at it, and share his thoughts on its findings. While it is possible that I have missed a few studies here and there, it will be difficult to make the argument that I have cherry picked the studies to favor private schooling, since I include all the studies mentioned by Mr. Casey in his post.

Drinking Age

Yesterday, over a hundred college presidents called for a reexamination of the current minimum drinking age and suggested it should be lowered. This is great news and could serve as an opportunity to begin an intelligent national dialogue on improving alcohol policies.

Unfortunately, the neoprohibitionists at Mothers Against Drunk Driving (MADD) and elsewhere have already sprung into action in an attempt to squelch any reform-minded opinions. MADD National President Laura Dean-Mooney said in a press release that any discussion of the minimum drinking age “must honor the science behind the 21 law which unequivocally shows that the 21 law has reduced drunk driving and underage and binge drinking.”

Of course, MADD’s preferred “science” ignores a very interesting working paper published by the National Bureau of Economic Research that shreds the oft-cited correlation between adoption of the Federal Uniform Drinking Age Act (FUDAA), which forced all states to have a minimum drinking age of 21, and a reduction in alcohol-related traffic fatalities.

How could this study’s findings differ so greatly from the research that MADD touts?

The paper, penned by Jeffery A. Miron and Elina Tetelbaum, points out that prior research consistently errs by including states that were unaffected by the law – the 12 states that had adopted a minimum drinking age of 21 long before FUDAA was passed and forced states to do so. Those states – for reasons unrelated to the federal law – experienced a dramatic decrease in alcohol-related traffic fatalities in the 80s and their inclusion in previous studies led many researchers to falsely conclude that the FUDAA was the key factor in the national trend.

That trend, however, began well before the FUDAA was passed in 1984. As the study notes: “[T]he decline began in the year 1969, the year in which several landmark improvements were made in the accident avoidance and crash protection features of passenger cars.” The study also recognizes that medical advances probably deserve a great deal of credit for the reduction.

While drunk driving statistics tend to attract the most attention in discussions of the minimum drinking age, the core purpose of such laws is to prevent minors from accessing alcohol. To this end, these laws have been an abject failure on college campuses. Even high school students seem to have little problem obtaining alcohol. A survey by the University of Michigan reveals that 8th and 10th graders find it easier to get alcohol than cigarettes.

Still, anti-drinking advocates cling to the notion that the minimum drinking age is effective and that state governments are unable to make sound decisions for their residents.

Would Someone Puh-leaze Answer This Question?

About a month ago, I piggybacked on an Eduwonk post asking the critical question that lovers of national academic standards refuse to answer: Why would federal standards — especially with stakes attached — be any less politicized than those established by states or districts? To clarify this a bit, let me rephrase the question: Why would the teachers unions, public-school administrators associations, and education bureaucrats – with their huge presences in and around DC, their outsized political power compared to parents, and their overwhelming interest in low standards and high funding – have any less sway over the feds than they have over other levels of government?

Sadly, no national standards standard bearers have answered these questions, and the leaders of the charge keep on making undefended proclamations. Look no further than today’s Flypaper post by Michael Petrilli. At the same time he rightly calls out the Washington Post for failing to understand that “what’s sorely lacking in Washington isn’t ambition, but hubris,” he asserts that the feds “could… provide greater transparency about how schools are performing—yes, through…national standards and tests.”

To quote Charlie Brown as Lucy pulls the football away: “AAUGH!!!”

Could someone PLEASE answer the question: Why would the feds be any less susceptible to standards-dumbing/avoiding/destroying than any other level of government? Indeed, given Washington’s abysmal track record on education, why should any rational person conclude that the feds wouldn’t be more susceptible to special-interest domination? And while we’re at it, could someone explain why standards from any level of government wouldn’t be more influenced by teachers unions and the like than standards delivered by parent-controlled education dollars for which schools would have to compete?

For national-standards stalwarts it’s easier to just not address political reality. But please, humor me (and Eduwonk): Explain how Washington suddenly got so high above pernicious political powers that federal standards wouldn’t be dragged into the same-old, smothering, education mud.